Nevada County home prices surge in May

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Median home prices in Nevada County increased more than 23 percent between May 2013 and a year prior, closely mirroring a statewide trend that saw prices surge to their highest level in five years, according to figures from local and state market reports.

As demand outpaced a thin supply of properties, median statewide home prices for new and existing houses and condominiums reached $340,000 in May, up 25.9 percent from $270,000 the same period last year. The median price rose by $16,000 during the month to its highest level since April 2008 when it was $354,000, according a state report published Thursday.

In Nevada County, median home prices reached $262,450 in May, up from $212,750 a year earlier.

“Our county is sometimes very different from the state, but right now, our own statistics are falling right in line,” said Kathleen Hinman, executive of the Nevada County Association of Realtors, which tracks local sales.

Statewide prices posted a 15th straight annual increase in May as investors and cash-buyers competed for homes. The numbers provide the latest evidence that California housing prices are soaring amid low inventories.

In May, 110 homes were sold on the Nevada County market, down 22 from the same time a year earlier. Year-to-date figures show a similar sign of low inventory: so far 530 homes have sold in 2013, whereas there were 563 homes sold by this time in 2012, according to NCAOR figures.

Statewide sales increased 1.2 percent from last year to 42,293 homes, the strongest May sales tally since 2006. Still, sales weakened in many parts of the state, including a 14 percent decline in San Francisco.

The median price for new and existing houses and condominiums in the San Francisco Bay Area hit $519,000, up 29.8 percent from $400,000 the same period last year to mark the 12th straight month of double-digit annual increases and seventh straight month of increases above 20 percent.

“We’re a little bit behind the Bay Area and a few other parts of the state,” Hinman said.

“We trail behind because of the composition of our marketplace,” she also said, noting the high percentage of retirees in Nevada County coupled with the comparative low level of job opportunities for younger home seekers.

Reflecting the state of the home inventory, California mortgage rates remains at an unprecedented low, according to the California Association of Realtors, which lists the average current rate at about 3.3 percent. Conventional mortgage interest rates are half of the recent historical average of 7 percent.

“This is an excellent time to buy if you are considering a purchase,” Hinman said. “We have around 3.5 to 4.05 in interest rates and they are projecting an average in the 4s for 2014 — but you never know what is going to happen.”

Michael Lea, director of San Diego State University’s Corky McMillin Center for Real Estate, said state prices will stabilize as fewer people owe more than their homes are worth, positioning them to put their homes up for sale.

At the end of March, 21.3 percent of California homes were in “negative equity” — meaning the outstanding loan balance exceeded the home’s value — down from 25.2 percent three months earlier, according to CoreLogic.

“We do not have a healthy market. We have an unusual market,” Lea said. “The high percentage of people with negative equity means people can’t sell.”

There was a 2.8-month supply of unsold single-family homes on the market in April, compared with a 4.2-month supply a year earlier, according to the most recent data from the California Association of Realtors. A five- to-seven-month supply is considered normal.